JCPenney: The Comeback Kid

There has been a ton of information lately about Ron Johnson and his takeover of JCPenney. JCPenney has been trying to redo itself for a long time now. During my senior project class for college we even had to create an advertising campaign for the company.

Why do I have all these numbers?

The goal of the project, our executive summary if you will, was to create an advertising campaign to save this sinking retail from the grips of certain bankruptcy. Now I won’t get too much into the plans that we set forth for the advertising campaign (I never was too good at traditional advertising campagins), but I would like to share some of the information that came out of the massive amounts of research that we did for the company.

S.W.O.T. Analysis

So if you’ve ever heard of a SWOT Analysis, you’re probably about ready to close this window and go look at Facebook or something. I promise though, I’ll make this as short and as interesting as possible (aka, I’ll use diagrams and numbers).

If you haven’t heard of a SWOT Analysis before, you’re lucky. To get you up to speed though, here’s the short and dirty of it: SWOT stands for Strengths, Weaknesses, Opportunities, Threats. Its a business idea that is meant to give you a good idea of how a company/organization/team is doing and where it should be looking to improve.

Strengths

To start with, JCPenney is huge, and I mean HUGE. Very few retailers have anywhere near as many locations as they do. They have 1,093 stores in just the United States & Puerto Rico.
This means they have a pretty large customer base who have at least visited their stores once (31.3 million customers a year to be exact.)

Number of Stores in the US

Macy’s: 800

Kohl’s: 1000

JCPenney: 1100

Weaknesses

They’re not making as much money as they used to. The economic “downturn” of 2008 hurt the operation margin of JCP drastically as you can see below.

Typically when the economy starts to go south people stop buying things. This has led to them having to reduce staffing resulting in cluttered stores and bad customer service.

This then becomes a very vicious cycle for a retailer to escape from as people stop coming because they have a bad experience and to make the experience better the company needs to make more money.

Opportunities

The Internet is the future of buying things and its continuing to grow at an amazing rate.

There was an estimated $170+ Billion spent on online retail stores in 2011

There is no reason JCPenney should not be better marketing itself online (plus its cheaper than selling things in the store).

Weaknesses

No one has trust in the JCPenney brand anymore. There has never been a time when I have purposely gone into a JCPenney to buy something.

I might walk through it to get back to my car because it is the only entrance to the mall, but I do not selectively go to JCPenney because they have something that I want.

The Future is Pretty Grim, huh?

Now with all this information provided above, you’d think that JCPenney is about ready to stop paying their electric bills and go out of business. This, however, is not the caseCue Dramatic Music & Enter Ron Johnson
As Ron Johnson points out in parts of his keynote speech, which you can see pictures of here, JCP is in the same condition that Apple was in 2001. Same market share and similar market caps and to even paint a better light, JCP is still profitable and is making significantly more money than Apple was back then.

Now we know how well Apple is doing now, so we can only imagine what Ron can do with turning around a ship as big and as comparitively well off as JCP.